FTC Requires Parent of Market Research Firm IMS Health to Sell Two Product Lines Before Acquiring Rival SDI Health
The Federal Trade Commission today announced that Healthcare Technology Holdings, Inc., the parent company of market research firm IMS Health Inc., has agreed to sell two product lines of rival SDI Health LLC, as a condition of allowing it to proceed with its acquisition of SDI.
The proposed settlement order requires the sale of SDI's promotional audit and medical audit businesses to an FTC-approved buyer to resolve the agency's charges that IMS's acquisition of SDI, as originally proposed, is anticompetitive and likely would increase prices for market research products in the health care industry. The settlement is part of the FTC's ongoing efforts to protect competition in the health care industry.
IMS is based in Danbury, Connecticut, and produces and sells health care data and analytics to pharmaceutical and biotechnology firms and other customers. SDI, which is headquartered in Plymouth Meeting, Pennsylvania, offers many of the same types of health care data and analytics to its customers. Customers use these data and analytics to promote and market their products, and otherwise manage their operations. Healthcare Technology, a health care market research firm, plans to acquire SDI through its subsidiary IMS.
IMS and SDI are competing providers of promotional audits, which are market research products that estimate advertising and other promotional activities for branded drugs. Drug makers and other customers use promotional audits to determine how much to spend in various categories to promote their branded drugs.
IMS and SDI also compete to provide medical audits, which estimate actual medical diagnoses made, and therapies prescribed, by physicians. Customers use medical audit data to assess which products are used to treat specific diseases, and to help them understand drug prescription and treatment trends in the health care marketplace.
According to the FTC's complaint, the U.S. market for promotional audits is highly concentrated, with only IMS, SDI, and Cegedim S.A. involved; SDI currently has 68 percent of the market, followed by IMS and Cegedim, with 30 percent and two percent, respectively. In the market for medical audits, only IMS and SDI compete. IMS controls 53 percent of the market, while SDI holds the remaining 47 percent.
In its complaint, the FTC alleges that the proposed acquisition would substantially increase IMS's share in both the promotional audit and medical audit markets, while at the same time eliminating the direct and substantial competition of SDI, its only significant competitor. As a result, IMS's acquisition of SDI likely would lead to a unilateral exercise of market power by IMS in these markets, and thus higher prices.
The proposed order settling the FTC's charges is intended to remedy the anticompetitive impact of IMS's proposed acquisition of SDI. It requires Healthcare Technology to sell all of the overlapping SDI businesses related to both promotional and medical audits to an FTC-approved buyer within three months of the completion of the deal. If Healthcare Technology has not provided an acceptable buyer within the allotted time, the Commission may appoint a trustee to sell the assets.
The proposed settlement order also requires IMS to hold the SDI promotional and medical audit assets separate and apart from its other businesses, and to ensure they remain competitive pending their sale.
The Commission vote approving the complaint and proposed consent order was 4-0. The order will be published in the Federal Register subject to public comment for 30 days, until November 28, 2011, after which the Commission will decide whether to make it final. Comments can be submitted electronically here.
NOTE: The Commission issues a complaint when it has "reason to believe" that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The issuance of a complaint is not a finding or ruling that the respondent has violated the law. A consent order is for settlement purposes only and does not constitute an admission of a law violation. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of up to $16,000.
The FTC's Bureau of Competition works with the Bureau of Economics to investigate alleged anticompetitive business practices and, when appropriate, recommends that the Commission take law enforcement action. To inform the Bureau about particular business practices, call 202-326-3300, send an e-mail to email@example.com, or write to the Office of Policy and Coordination, Bureau of Competition, Federal Trade Commission, 601 New Jersey Ave., Room 7117, Washington, DC 20580. To learn more about the Bureau of Competition, read Competition Counts. Like the FTC on Facebook and follow us on Twitter.
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